Asean free trade areas to be upgraded

Asean free trade areas to be upgraded

22 Nov 2022

Talks on the upgrade of Asean’s free trade area with China have been launched while negotiations on upgrading the one with Australia and New Zealand wrapped up recently. Leaders of Asean and China have announced and welcomed the official launch of negotiations for the upgrade of the Asean-China Free Trade Area (ACFTA), reported Vietnam News Agency.

Speaking at the recent 25th Asean-China Summit in Cambodia’s Phnom Penh, they affirmed that the upgrade is meant to ensure that the ACFTA helps further deepen and broaden Asean-China economic relations and contribute to the region’s post-pandemic economic recovery.

ACFTA is Asean’s oldest free trade agreement among its dialogue partners. Upgrading ACFTA sends a signal to the private sector and all stakeholders that both Asean and China are committed to making the ACFTA more relevant to businesses that are responsive to global challenges.

The upgraded ACFTA will cover areas of mutual interest, including the digital and green economies, supply chain connectivity, competition, consumer protection, and micro, small, and medium enterprises. China is Asean’s largest trade partner and the second largest source of foreign direct investment (FDI).

In 2021, total merchandise trade between the two sides reached US$669 billion (RM3.06 trillion), registering a year-on-year increase of 29% despite the Covid-19 pandemic’s lingering impacts.

During the same period, FDI flows from China to Asean amounted to US$13.6 billion, almost double the US$7 billion in 2020, and equivalent to 7.8% of total FDI into the bloc.

Moving forward, the upgraded ACFTA will further support these trends and momentum, according to the Asean Secretariat.

Meanwhile, leaders of Cambodia – the 2022 Chair of Asean, Brunei – the country coordinator for Asean-Australia-New Zealand Free Trade Area (AANZFTA), Australia, and New Zealand have announced the substantial conclusion of the negotiations for the AANZFTA upgrade.

The upgrade was said to be a key priority economic deliverable of Cambodia’s chairmanship of Asean, according to the announcement made at the 40th and 41st Asean Summit in Phnom Penh. Trade between Asean, Australia and New Zealand remained robust despite the global effects of the Covid-19 pandemic and geopolitical tensions.

In 2021, total merchandise trade between Asean and Australia reached US$81.6 billion, up 49% year-on-year and higher than pre-Covid-19 rates.

Meanwhile, trade between Asean and New Zealand last year reached US$11 billion, growing by 22.5%. In 2021, FDI from Australia and New Zealand to Asean amounted to US$589 million.

The agreement establishing AANZFTA, signed in Thailand on Feb 27, 2009, is being upgraded to ensure that it is fit-for-purpose and is future-proofed against emerging challenges.

The upgrade also aims to maintain its high standard, remain relevant for businesses, enable it to effectively contribute to post-pandemic economic recovery efforts, and efficiently respond to global and regional challenges.

Asean secretary-general Datuk Lim Jock Hoi, one of the chief architects of AANZFTA, welcomed the substantial conclusion of the talks on the upgrade.

He further highlighted AANZFTA’s instrumental role in strengthening not only the Asean-Australia comprehensive strategic partnership and Asean-New Zealand strategic partnership, but also regional economic integration.

Source: Bernama